6 TIPS FOR BUILDING A PROFITABLE FASHION BUSINESS

To build a successful label, you’ll have to think like an entrepreneur from the start. That means understanding how a business works and putting together a plan that lays out short-term, medium-term and long-term goals. Once your company is up and running, build solid relationships with manufacturers, buyers and investors by being consistently reliable and honest about what you’re doing.

Being a good entrepreneur also means having the hunger and determination to give it your all. Saks Fifth Avenue President Marigay McKee spoke to Caro and Basso about Christopher Kane: “When I ﬁrst met Christopher, he had borrowed £300 from his grandmother to buy the fabric for his collection from a Glasgow street market. In his year at Central St. Martins, there was also a very wealthy student who spent a substantial amount of money on his collection. Christopher has gone on to become successful. The other hasn’t. Christopher had hunger and passion and the other designer didn’t.”

2. Recognize the importance of product development

Start small with one product line – then develop the brand from there, in a way that feels consistent and carries forward the same design DNA.

Setting the right price for your product is crucial in finding success. Work it out by starting with the amount that a customer would be willing to pay, and working backwards to calculate how much you can spend on materials and manufacturing while still turning a profit.

The report recommends that young designers pay more attention to feedback from buyers than from the press; good reviews are nice to have, but the only thing that will sustain a business is sales.

3. Be clear about your unique brand proposition, and support it with a marketing and communications plan

It’s important to have a strong vision of your brand’s identity from the beginning. “Young designers need to understand what they are and why they are starting their own businesses,” says Vanessa Friedman, fashion director of The New York Times. “If they do it, it is because they really believe that they have something to say that cannot be said in the context of Paul Smith or Oscar de la Renta or Dior.”

Start with a marketing plan that sets out which customers you’re targeting, and how you’re going to approach them. You may want to look at hiring a PR company – but not until your business is stable. “PR and communications are useful tools to support a designer and bring their work to the attention of a wider audience only when their business can support this attention,” says Daniel Marks, director of The Communications Store.

4. Understand and address the challenges of production

New businesses can often struggle with production – you’ll be ordering small quantities at first, which leaves you in a poor bargaining position with manufacturers. They may ask you for a deposit long before you’re going to receive payment from a retailer. This can be difficult, but it’s essential to pay promptly so that production is not delayed – otherwise you could end up late to deliver to retailers, damaging your relationships.

5. Find the key to sales and distribution

To be successful, you’ll need to get the attention of buyers. They’ll want to know what’s unique about your product, how it fits with their other brands, whether it’s at the right price point, and whether your business is well-structured. “I think what could be improved is the designers’ sense of place,” says Anne Pitcher, managing director of British department store Selfridges. “They need to know how they compare to the competition. Who is going to buy the product? Where you would like to be sold, realistically? Will it be the right price? These questions have to be answered before picking up a pen to design.”

If you’re planning to sell online, be aware that colorful and printed products are usually most popular, and any garment with an unusual shape or fit is going to be a tough sell on a website. You’ll also need a complete range of sizes. Once you can afford it, setting up your own website will maximize your profit margins and give you direct access to customers.

6. Understand the importance of cashflow, funding and ﬁnancing

One of the biggest challenges you’ll face as a new business is that cash flows out – for product development and manufacturing – long before it comes back in from retailers or customers. From the very beginning, you’ll need to know where your funding is coming from and keep your finances under control. Taking investment can mean losing some of your control over the business, so think carefully and don’t give away too much too cheaply.